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Will 400 Million Accounts Give Apple the Power to Create a Payment Network?

Posted on Jun 13, 2012

Last week at the annual World Wide Developers Conference, Apple took what many believe is another step in the evolution of an iPay concept. The new Passbook app available in iOS6 is just the latest in a number of steps Apple is taking to change the way consumers make purchases.

Passbook allows consumers to aggregate boarding passes, coupons, loyalty points and movie tickets. It does not store credit card information so it is not technically an “eWallet”, but just how hard would it be to link an iTunes account to the Passbook? This strategic maneuvering allows Apple to famliarize consumers with the process before adding the in the last piece of the payment puzzle.

Many mobile payment and eWallet startups are taking quite a different tactic when approaching the market. With millions of venture capital dollars invested in numerous mobile payments schemes, theses startup companies are all being pressed into vying to change consumer and merchant behavior in one fell swoop. Apple, on the other hand, is quietly building an infrastructure as well as gradually shifting consumer behavior so adding the final payments piece would just be, well, obvious.

Behind the scenes, there are a number of tactics Apple could employ that would forever change how payments are processed. Their approach to consolidating small payments made at the iTunes store in order to reduce transaction costs would only be expanded upon. To take this concept one step further, what if Apple connected directly to all financial institutions for purposes of payment settlement? Sounds like VISA and MasterCard might have reason to worry.

If this is the case, Apple should find a solid partner in the payment processing space… maybe even one like US Dataworks which already handles a couple of billion payments each year and clears to over 700 financial institutions.

Source Article:  ReadWriteWeb June 2012